REG - Proteome Sciences - Final Results
10/04/2024 07:00
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RNS Number : 9333J Proteome Sciences PLC 10 April 2024
10 April 2024
Proteome Sciences plc
("Proteome Sciences" the "Company" or the "Group")
Final results for the year ended 31 December 2023
The Company is pleased to announce its audited results for the year ended 31
December 2023.
Highlights:
· Total revenues of £5.03m (2022: £7.78m)
· Proteomic services revenues of £1.63m (2022: £2.75m)
· TMT(®) sales, and royalties of £3.40m (2022: £4.16m)
· Total costs of £6.65m (2022 £6.05m)
· EBITDA loss of £1.14m (2022: £2.13m)
· Adjusted EBITDA* loss of £0.92m (2022: Adjusted EBITDA* profit of
£2.43m)
· Loss after tax of £2.44m (2022: profit after tax £1.33m)
· Cash reserves at 31 December 2023 of £2.03m (2022: £3.99m)
* EBITDA is a non-GAAP company specific measure which is considered to be a
key performance indicator of the Group's financial performance. Adjusted
EBITDA is calculated as operating profit before depreciation (including
right-to-use assets amortisation), amortisation, non-recurring costs, and
employee share-based payment.
Dr. Mariola Soehngen, Chief Executive Officer of Proteome Sciences plc,
commented:
The second half of 2023 proved to be challenging for Proteome Sciences. The
macroeconomic situation impacted on our client base and resulted in a decrease
in revenues caused by the delay in the timing of services contracts. We
remained in close contact with our clients over that period and the higher
dynamics we have seen since the start of 2024 would appear to support the
hypothesis that the market demand is returning to normal. During the second
half of 2023 we set up our US lab which opened in early 2024. For US based
clients who did not previously want to ship their samples to Europe we have
provided a US solution and we will now be eligible for projects funded by US
institutions where the funds must be spent in the US. We invested
substantially in 2023 to expand our business by establishing the facility in
San Diego, developing new ranges of TMT® and data-independent acquisition
("DIA") tags and launching SCP to address the growing global demand for
proteomics in 2024.
The 2024 year has experienced significant customer engagement and interest in
proteomics services reflected by the considerable increase in customer contact
and quotations provided across multiple projects from which new contacts have
been secured in the first quarter. We expect this momentum to continue
throughout 2024.
For our tag business we expect the introduction of the 32plex TMTpro™ tags
due in 2024 to generate strong interest in the market and significant revenues
in the coming years.
Our DIA tags are being evaluated by academic partners and we have initiated
discussion around licensing for commercial development that we expect to
conclude during the year.
Interest in SCP has continued to grow since our launch and we expect to run
more commercial projects in the near future.
In summary, we expect the investments that we have made and the new products
and services we have introduced to add to and bring the business back to
growth in 2024.
Report and Accounts and Notice of Annual General Meeting:
Copies of the Annual Report and Accounts together with notice of the Annual
General Meeting ("AGM") will be posted to shareholders shortly and made
available on the Company's website (www.proteomics.com
(http://www.proteomics.com) ).
The AGM of the Company will take place at 12 noon on Thursday 16 May 2024 at
Allenby Capital, 5 St Helen's Place, London, EC3A 6AB. Formal notice of
the AGM will be sent to shareholders which will contain further information
and the resolutions which will be proposed at this meeting.
For further information please contact:
Proteome Sciences plc
Dr. Mariola Soehngen, Chief Executive Officer Tel: +44 (0)20 7043 2116
Dr. Ian Pike, Chief Scientific Officer
Richard Dennis, Chief Commercial Officer
Abdelghani Omari, Chief Financial Officer
Allenby Capital Limited (Nominated Adviser & Broker)
John Depasquale / Lauren Wright (Corporate Finance) Tel: +44 (0) 20 3328 5656
Tony Quirke / Stefano Aquilino (Equity Sales & Corporate Broking)
About Proteome Sciences plc. (www.proteomics.com (http://www.proteomics.com/)
)
Proteome Sciences plc is a specialist provider of contract proteomics services
to enable drug discovery, development and biomarker identification, and
employs proprietary workflows for the optimum analysis of tissues, cells and
body fluids. SysQuant® and TMT(®)MS2 are unbiased methods for identifying
and contextualising new targets and defining mechanisms of biological
activity, while analysis using Super-Depletion and TMTcalibrator™ provides
access to over 8,500 circulating plasma proteins for the discovery of
disease-related biomarkers. Targeted assay development using mass spectrometry
delivers high sensitivity, interference-free biomarker analyses in situations
where standard ELISA assays are not available.
Chief Executive Officer's Statement
Group revenues for the full year decreased by 35% to £5.03m (2022: £7.78m),
services revenue decreased by 41% to £1.63m (2022: £2.75m) and sales and
royalties attributable to TMT(®)/TMTpro™ reagents decreased by 18% to
£3.40m (2022: £4.16m*).
* excluding the sales milestone payment of £0.87m received in 2022 under the
exclusive licence and distribution agreement with Thermo Fisher Scientific.
Despite our expectation at the end of 2022 and during H1 2023 to deliver
further growth in 2023, the second half of 2023 did not develop as expected.
As alluded to in our investor meeting in September 2023 and announced on 30
November 2023 the challenging macroeconomic situation with weak growth, high
inflation and tight monetary policy has impacted many of our clients and
partners. Particularly the biotech sector was severely affected by these
headwinds, exemplified by significant layoffs and reduction of R&D budgets
industry wide. Also, larger customers reduced their activities in the
proteomics field and postponed planned projects to 2024. Given the market
requirement for our proteomic products and services we expect customer
interest for our services to significantly improve during 2024, with the
introduction of new next generation tags in the isobaric and isotopic field,
and the output from the US lab, the Company is confident to see the business
return to growth in 2024.
We have continued our planned strategic investment in both our Frankfurt and
San Diego laboratories and added various instruments primarily in the US
laboratory including an Orbitrap Ascend Tribrid mass spectrometer and
Accelerome automated sample preparation platform. We launched single cell
proteomics ("SCP") in October 2023 and are working on the first projects. In
addition, we have advanced our new tag developments (isobaric and isotopic)
and expect to launch both near term plus develop next generation isotopic
tags.
Total costs, excluding finance costs, rose to £6.65m (2022: £6.05m) which
has resulted in an operating loss of £1.62m (2022: operating profit of
£1.73m) and a net loss of £2.44m (2022: profit after tax of £1.33m). Cash
reserves at the year-end were at £2.03m (2022: £3.99m).
2023 2022
£'000 £'000
Revenue 5,028 7,780
Gross profit 1,647 4,767
Administrative expenses * (3,268) (3,039)
EBITDA (1,137) 2,125
Other non-cash items and non-recurring costs 218 303
Adjusted EBITDA (919) 2,428
Adjusted EBITDA (a non-GAAP Group specific measure (see Note 3) which is
considered to be a key performance indicator of the Group's financial
performance) decreased by £3.35m year on year mainly due to lower revenues
while costs have increased due to additional staff and the expansion to the
U.S.
*Includes depreciation of £0.5m (2022: £0.4m)
Services
It was a challenging year in our service business in 2023. As in previous
years, the US is by far our most significant market in terms of biopharma
companies who outsource their proteomic services to Contract Research
Organisations ("CROs") such as Proteome Sciences. Unfortunately, the biopharma
market especially in the US was marked by employee layoffs in 2023.
According to Fierce Biotech, a company that provides news, analysis and data
relating to the biotech sector, biopharma layoffs were 57% up in 2023. This
has been confirmed by other Life Science provider companies in their public
reporting. The significantly reduced level of financing in biopharma
resulted in workforce reductions affecting 187 organisations in 2023. We
were in contact and discussing projects with 38 of these that were primarily
focused in proteomic pre-clinical and clinical research. Projects were either
cancelled before samples were shipped, or significantly delayed pending future
financing rounds. This seriously affected our ability to win business.
During the first half of 2023 orders received and sales were performing to
plan halfway through the year, but this slowed significantly in the second
half of 2023. Projects under discussion in the first half of 2023 did not
arrive in the second half of the year, and initial discussions on new projects
slowed. A considerable client outreach effort was initiated at the start of
the second half of the year to offset this slowdown and that did uncover new
project opportunities that are currently under discussion, so we believe the
worst of the 2023 slowdown is behind us now. In the US the main focus was
our investment in the new laboratory and preparing the market for the pending
launch of the SCP service. Over and above this additional outreach, we
continued our presence in various conferences and exhibitions throughout 2023
in both the US and Europe, combining these events with local client visits
when in the close vicinity.
The news that the company has invested in a new US based laboratory in San
Diego was very well received by existing clients who said they will use our
new facility from 2024 onwards, and from new customers who will use us for the
first time as a result of the new laboratory. It was not unexpected to
hear that all clients preferred a local facility to avoid excessive shipping
charges to get their samples into Europe, and to avoid any customs issues to
clear samples through German importation control. Equipping the new lab
with a latest generation mass spectrometer was also seen as giving us a
distinct advantage over more local competition. In addition, our US entity
Proteome Sciences US Inc enables the company to partake in National Institute
of Health ("NIH") and other US government sponsored grants.
In the European section of our business, we concluded all the work connected
with a large Europe based clinical trial through the year. From a European
perspective the UK continues to be the more active component, and we have
picked up several important clients requiring proteome analysis in projects
destined for, or in clinical trials.
In general, the biopharma investment slowdown did affect our business more
than we expected at the start of 2023, but given the investment in new
equipment, facilities and new product offerings commercially we remain
confident to get back on our growth trajectory in 2024.
Licences
Income from licensing our intellectual property assets remains a key
contributor to revenue, primarily through the TMT(®) and TMTpro™ reagents.
We retain a portfolio of patents and applications covering biomarkers and
reagents which we continue to monitor for commercialisation potential. As the
field around use of blood proteins in diagnosis of Alzheimer's disease, other
neurodegenerative disorders and many cancers our patented biomarkers may prove
critical in development of novel diagnostic tests opening up additional
licensing opportunities.
Tandem Mass Tags(®)
In line with other parts of the business the revenue from TMT(®) and
TMTpro™ reagent sales decreased 18% relative to 2022 (excluding milestone
payment). In part this is attributable to the full year effect of a one-off
adjustment to running royalties following expiry of the TMT1 patent family in
September 2022 but also reflects weaker markets for the tags globally. A range
of factors are likely to have impacted tag sales including the general
macroeconomic situations, the use of alternative mass spectrometry methods
such as data independent acquisition and the delay of purchases pending
introduction of the 32plex TMTpro™ tags due in 2024.
We are working with our licensee Thermo Fisher Scientific to address the
market challenges and are excited at the prospects for the extended TMTpro™
reagents that now allow large discovery projects to be completed in a single
experiment, greatly improving the coverage and quantitative precision and
accuracy available to researchers.
Stroke Biomarkers
Our two licensees Randox Laboratories and Galaxy CCRO ("Galaxy") have made
progress with their clinical trials during 2023. In connection with Galaxy's
initiation of a first clinical study in Europe we received a milestone.
Galaxy is a US based clinical contract research organisation, which is
developing a point of care test for the diagnosis and timing of stroke onset
in order to guide the use of specialist thrombolytic treatment. Under the
terms of the licence with Galaxy we have received equity in Galaxy as an
initial fee in 2019 and similarly the milestone in 2023 was also satisfied in
equity. As a result of this we own a minority stake in Galaxy and under the
licence we are entitled to subsequent development milestones and a running
royalty on any product sales. We expect more news to come during 2024 with the
possibility for further milestones relating to trial completion and product
launches on the horizon.
Research
During the year we have focused our research efforts on improving our
processes and have successfully achieved a significant improvement in our
sample preparation processes enabling us to increase our capacities by 50%.
The new workflows are also simpler, more robust and deliver equivalent
performance within the same budget. In parallel, we continued to optimise
workflows for Single Cell Proteomics. Over the year we were able to improve
coverage so that we can attain quantification for approximately 1,500 proteins
per cell in studies where we measure 576 individual cells. Overall performance
is stable across different cell types and we are now beginning our first
commercial activities with the SysQuant(®)-SCP service operating from our
Frankfurt laboratory.
We also continue research to develop new reagents for proteomics and this
resulted in our producing a set of non-isobaric tags for multiplexing of
data-independent acquisition ("DIA") studies. The tags are being evaluated by
academic partners and we have initiated discussions around licensing for
commercial development that we expect to conclude during the year. We also
completed the development of the extended set of TMTpro™ reagents and look
forward to their introduction to our services in the first half of 2024. We
continue to innovate in chemistry and will be working on ancillary products to
add new functionality for TMTpro™ enabled studies through a sponsored
research project.
Operating Environment
We started the year 2023 with a strong order book. Our service business
developed positively in H1 2023 with 19% increase over the same period in 2022
- a trend which could not be sustained in H2 2023. The TMT(®) business
remained flat in the first half of the year and decreased by 18% year on year.
Next to the macroeconomic changes which have influenced our clients and us
negatively the expectation of the new 32plex isobaric tags might also have
played a role in the cautious ordering of tags.
To address the growing DIA market, we have developed a totally new line of
isotopic tags which we aim to partner with a strong distribution partner.
SCP as our new service was launched in October 2023 and we have started first
projects in partnership with academic key opinion leaders and our long-term
customers. The roll out of this service is expected to unfold in 2024 when
customer projects will be delivered from the Frankfurt lab.
The US lab has been opened in January 2024, and was met with good interest
primarily in the US market where we plan to address the customers who have had
reservations to ship samples to the EU. With the lab in San Diego, one of the
largest biotechnology and pharmaceutical research hub globally, we have
addressed these concerns and are starting customer projects in 2024.
At the end of a difficult year for our business and following the substantial
strategic investments that have been made for the future, we would like to
thank all our teams for their contribution, passion and hard work. We expect
the macroeconomic trends to improve in the course of 2024 and these should
impact positively on our business.
Outlook
We invested substantially in 2023 to expand our business by establishing the
facility in San Diego, developing new ranges of TMT® and DIA tags and
launching SCP to address the growing global demand for proteomics in 2024.
The 2024 year has experienced significant customer engagement and interest in
proteomics services reflected by the considerable increase in customer contact
and quotations provided across multiple projects from which new contacts have
been secured in the first quarter. We expect this momentum to continue
throughout 2024.
For our tag business we expect the introduction of the 32plex TMTpro™ tags
due in 2024 to generate strong interest in the market and significant revenues
in the coming years.
Our DIA tags are being evaluated by academic partners and we have initiated
discussion around licensing for commercial development that we expect to
conclude during the year.
Interest in SCP has continued to grow since our launch and we expect to run
more commercial projects in the near future.
In summary, we expect the investments that we have made and the new products
and services we have introduced to add to and bring the business back to
growth in 2024.
We would like to thank our shareholders and team for their continuing support,
and we look forward to communicating renewed progress in 2024.
Dr. Mariola Söhngen
Chief Executive Officer
9 April 2024
STRATEGIC REPORT
Review of the Business
The principal activities of the Group involve protein biomarker research and
development. As a leader in applied proteomics, we use high sensitivity
proprietary techniques to detect and characterise differentially expressed
proteins in biological samples for diagnostic, prognostic and therapeutic
applications. In addition, we invented and developed the technology for
TMT(®) and TMTpro™, and manufacture these small, protein-reactive chemical
reagents which are sold for multiplex quantitative proteomics under exclusive
license by Thermo Fisher Scientific.
Proteome Sciences is a major provider of contract research services for the
identification, validation and application of protein biomarkers. Our clients
are predominantly pharmaceutical and biotechnology companies, but we also
perform services for other sectors including academic research. While we have
several well-established workflows that meet the needs of many customers, we
retain our science-led business focus wherever possible, developing new
analytical methods, new reagents and data analysis tools to provide greater
flexibility in the types of studies we can deliver. Our contract service
offering remains centred on mass spectrometry-based proteomics, and this is
becoming more widely implemented in drug development projects as the
pharmaceutical industry seeks to expand biological knowledge beyond genomics.
These services are fully aligned with the drug development process, can be
used in support of clinical trials and in vitro diagnostics, and include
proprietary bioinformatics capabilities.
Progress during 2023
Growing Our Services Business
As in all sectors of technology-based sales, no organisation can stand still
and offer the same services year in and year out. As ligand binding
technologies like multiplex ELISA expand both antibody and aptamer arrays to
cover more proteins per run, thereby more closely compete with traditional
proteomic analysis by mass spectrometry, we must take our services deeper into
the proteomic field.
Single Cell Proteomics is a good example of how the company is moving forward,
by using mass spectrometry to achieve protein detection levels currently
several orders of magnitude greater than ELISA based technologies can achieve
at this time. Another clear application area for mass spectrometry is in
detection of more post translational modifications on the proteins detected in
a more conventional run. We see an increasing need from biopharma to detect
post translational modified peptides and proteins as end-point biomarkers in a
clinical trial. This can provide ongoing business via classical protein
Discovery based projects and, more importantly as the drug progresses into
clinical trials, a Targeted assay under Good Clinical Laboratory Practice
("GCLP") laboratory standards. Clients have informed us that we are one of
a few CRO's that they have identified who can take a research project now
through to clinical reporting base in the future under more stringent GCLP
standards. Furthermore, we continue to meet both new and current clients
to discuss their upcoming proteomic needs and how we can help them. As
protein experts, clients value our thoughts and processes on how we can solve
their problems. Proteome Sciences will be expanding its services to
include these 32 tags by end H1 2024, thereby having a head start on other
CRO's who will have to wait for the new tags to be available from Thermo
Fisher Scientific.
Finally, we have made a significant step by investing in our US laboratory.
This will make it easier for current US clients to ship samples to us, and it
removes the barrier for new clients to do the same. These new clients will
be biopharma but will also address the considerable academic market.
Many academic institutes could not use our Frankfurt facility because their
grant money could only be spent in the US. Proteome Sciences US Inc also
enables the company to participate in NIH/US Government grants as a US entity,
employing US employees and have a US based footprint. With the latest
generation mass spectrometer in the San Diego lab, we are better placed than
the local providers.
Expanding beyond the core proteome
We have been delivering deep analysis of post-translational modifications
through our SysQuant(®) phosphoproteomics workflows for many years and
introduced new methods for analysis of protein ubiquitylation more recently.
These two methods have been used across many different types of studies
enabling our customers to better understand how their drug targets fit into
the wider biological context, as well as providing deeper insights into the
mechanism of action of their experimental drugs. In 2023 we started to expand
our coverage to include additional modifications relevant to a range of
disease areas that were previously poorly served by traditional proteomics
methods. We continue to evaluate the potential to add further protein
modifications to our repertoire, along with adding additional analytes in the
metabolic space where the same mass spectrometry platforms can be deployed.
Single Cell Proteomics
Our launch of Single Cell Proteomics services in October 2023 followed an
intensive development process reflecting the large technical challenge of
working with such limited material. We have now initiated several biological
studies with academic collaborators to demonstrate different aspects of the
technology as well as a proof-of-concept study with one of our long-term
customers. Critical to developing SCP is the downstream data analysis and
visualization. We have been working on an in-house tool for streamlining data
quality assessment, pre-processing and statistical analysis that allows us to
identify cellular diversity based on the expression profiles of over 1,000
proteins per cell. Interest in SCP has continued to grow since our launch and
we expect to run our first commercial projects in the near future.
Status of the Tandem Mass Tag(®) Product Portfolio
During 2023 we have been working on the largest extension of TMT™
multiplexing as we increase the current 18plex tags to 32plex. This was in
response to market demand as the need to use more samples in proteomics
studies is being widely recognised. Whilst many groups have been moving
towards data-independent acquisition methods to gain throughput, this has been
at the cost of some analytical precision and we believe that introduction of
an additional 14 channels will re-balance the demand for TMTpro™ reagents
which still provide the greatest combination of quantitative precision and,
when combined with our patented MS3 acquisition methods, accuracy. Commercial
stocks of the additional 14 tags have been synthesized and we are working with
our licensee Thermo Fisher Scientific to optimise the mass spectrometry
acquisition methods. We are introducing 32plex workflows to our standard
proteomics services which will be available ahead of the wider commercial
launch of the reagents.
Stroke biomarkers
We currently have two licensees to our stroke biomarkers and both have been
engaged in clinical trials of their respective tests during 2023. Randox
Laboratories have a long-running trial based in the UK nearing completion and
results are expected during 2024. We would hope that a product approval and
launch may then follow swiftly, at least for the European market. Our other
licensee, Galaxy CCRO, continues to operate in stealth mode, with a
preliminary clinical trial of the GSTP marker initiated in Glasgow during the
second half of 2023. Galaxy have indicated they expect a read-out of the
Rhesus trial during 2024 and this will inform decisions around a full
regulatory trial both in Europe and the US. We own a minority stake in Galaxy
and under the license we are entitled to subsequent development milestones and
a running royalty on any product sales.
Patent Applications and Proprietary Rights
During the year 2023 23 new patents were issued across five different
families. Of these 6 related to the TMTpro™ reagents and methods of use and
6 related to biomarkers for Alzheimer's disease and cancer. One new patent
application was submitted relating to new isotopic tags for data independent
acquisition mass spectrometry. Overall costs of maintaining the patent
estate were slightly lower than in 2022 due to expiry of several early TMT
patents.
Strategic evaluation
We have used 2023 to further implement our strategy of organic growth. In
particular we have:
- Addressed the growing DIA market by developing a totally new line of
isotopic tags which we will licence with a strong distribution partner.
- Worked on the life cycle management of TMT by developing 32plex
isobaric tags.
- Launched SCP in October 2023 as our new service and have started
first projects. The roll out of this service is expected to unfold during 2024
when customer projects will be delivered from the Frankfurt lab.
- Opened the US lab in January 2024.
Financial Review
Results and Dividends
Key Performance Indicators ("KPI's")
● The directors consider that revenue, adjusted EBITDA, and
profit before/after tax are important in measuring Group performance. The
performance of the Group is set out in the Chief Executive Officer's
Statement.
● The directors believe that the Group's rate of cash
expenditure and its effect on Group cash resources are important. Net cash
outflows from operating activities for 2023 were £0.48m (2022: net cash
inflows of £2.14m). The costs in 2023 were higher when compared to 2022 due
to the investment in our San Diego site, development of next generation tags
and the launch of SCP. We suffered from lower revenues in biomarker services
and TMT(®) as compared to 2022. Cash at 31 December 2023 was £2.03m (31
December 2022: £3.99m).
● In 2023 service revenues decreased
by 41% to £1.63m (2022: £2.75m). As a proportion of total group
revenue (excluding the milestone revenue) service revenues in 2023
was 32% compared to 40% in 2022.
Financial Performance
For the twelve-month period ended 31 December 2023 revenue decreased 35% to
£5.03m (2022: £7.78m)
● Licences, sales and services revenue decreased 27% to £5.03m (2022:
£6.91m (adjusted for the milestone)). This is comprised of two revenue
streams: TMT(®) related revenue and Proteomic (Biomarker) Services.
Sterling values of our sales and royalties received for TMT(®) tags decreased
by 18% to £3.40m (2022: £4.16m)
● Adjusted EBITDA decreased to (£0.92m) (2022: £2.43m)
● The loss after tax was £2.44m (2022: profit after tax of £1.33m)
Taxation
Owing to the changing nature of our services business, with a stronger focus
on commercial activities, we have not fully assessed our available R&D tax
credit for 2023, and such amounts are only recognised when reasonably assured.
Costs and Available Cash
● The Group maintained a positive cash balance in 2023 and continues to
seek improved cash flows from commercial income streams. Due to lower revenues
and higher operating costs year on year, the Group had a negative cash flow in
the year. Administrative expenses in 2023 were £3.27m (2022: £3.04m)
● Staff costs for the year were £3.35m (2022: £3.12m) of which £0.22m
was a share based payment charge (2022: £0.30m)
● Property costs without charges on rent of £0.44m were higher than
previous years (2022: £0.16m) also including property costs for the lab in
San Diego
● Finance costs relate to interest due on loans from two major investors
in the Company and lease interest. Costs of £0.80m were higher than the
prior year (2022: £0.47m)
● Trade and other payables were £0.63m (2022: £0.82m)
● Trade and other receivables were £0.96m (2022: £1.44m)
● Cash at the year end was £2.03m (2022: £3.99m)
Principal Risks and Uncertainties
Commercialisation Activities
It is uncertain whether our range of contract proteomic services will generate
sufficient revenues for the Group ultimately to be successful in an
increasingly competitive commercial market which generally favours companies
with a broader technology platform than our own. Similarly, our increased
capacities and the opening of our US laboratory create a risk that we do not
generate sufficient orders to make our commercial activities profitable.
Management of Risk: The Group has sought to manage this risk by broadening its
proteomic services offering by increasing the coverage of unbiased discovery
experiments and broadening capabilities for analysis of very small samples
including single cells, investing in our own sales by dedicating more staff
time to direct business development activities in our principal commercial
territories and adopting conventional service-based metrics directed at speed,
cost and quality.
Adding new services bears the risk that competitors are already more advanced,
and it will be difficult to find and retain new customers.
Management of risk: We believe the technology we are developing for single
cell proteomics has a high demand in the market and hence we believe there is
sufficient room for many players to satisfy the demand. Moreover, Proteome
Sciences has a USP (Unique Selling Point) as we are the owner of TMT(®) which
gives us a number of advantages (including cost control) vis à vis
competitors.
Dependence on Key Personnel
The Group depends on its ability to retain a limited number of highly
qualified scientific, commercial and managerial personnel, the competition for
whom is strong. While the Group has entered into conventional employment
arrangements with key personnel and staff turnover is low, their retention
cannot be guaranteed as evidenced by 1 resignation during 2023.
Management of Risk: The Group has a policy of organising its work so that
projects are not dependent on any one individual, and we have strong
managerial oversight and support for our laboratory-based staff. Retention
is also sought through annual, role-based reviews of remuneration packages,
performance related bonus payments, and the opportunity for share option
grants.
Investment Limitations
Sales and royalties from TMT(®) have historically been key to revenue and
working capital for the group to invest in the business. We are still reliant
on TMT(®) sales and royalties for the majority of our revenues and working
capital to invest in growing the business remains limited.
Management of Risk: In addition to previous cost reduction and ongoing
containment measures which have significantly changed the cost profile of the
business over the last years, we also actively engage with our major creditors
to manage the Company's debt.
Competition and Technology
The international bioscience sector is subject to rapid and substantial
technological change. There can be no assurance that developments by others
will not render the Group's service offerings and research activities obsolete
or otherwise uncompetitive. Proteomics remains a growth area where
increasing demand from the pharmaceutical industry remains ahead of the growth
in service provider capacities.
Management of Risk: The Group employs highly experienced research scientists
and senior managerial staff who monitor developments in technology that might
affect the viability of its service business or research capability. This is
achieved through access to scientific publications, attendance at conferences
and collaboration with other organisations.
Licensing Arrangements
The Group intends to continue sub-licensing new discoveries and products to
third parties, but there can be no assurance that such licensing arrangements
will be successful.
Management of Risk: The Group manages this risk by a thorough assessment of
the scientific and commercial feasibility of proposed research projects which
is conducted by an experienced management team. Risk has also been reduced by
decreasing the overall number of research projects and re-distributing
available resources.
Patent Applications and Proprietary Rights
The Group seeks patent protection for identified protein biomarkers which may
be of diagnostic, prognostic or therapeutic value, for its chemical mass tags,
and for its other proprietary technologies. The successful commercialisation
of such biomarkers, chemical tags and proteomic workflows is likely to depend
on the establishment of such patent protection. However, there is no
assurance that the Group's pending applications will result in the grant of
patents, that the scope of protection offered by any patents will be as
intended, or whether any such patents will ultimately be upheld by a court of
competent jurisdiction as valid in the event of a legal challenge. If the
Group fails to obtain patents for its technology and is required to rely on
unpatented proprietary technology, no assurance can be given that the Group
can meaningfully protect its rights. All patents have a limited period of
validity and competing products may be sold by third parties on expiry in each
territory. The final TMT1 patent expired in the US in September 2022. This was
the last case with broad claims to the field of isobaric tagging, but the
patents covering the TMT(®) and TMTpro™ products themselves, along with
several proprietary methods such as TMTcalibrator™ and MS3 quantification
remain in force. Whilst the expiration of the earliest TMT patent results in a
reduced royalty rate under the exclusive licence and distribution agreement
with Thermo Fisher Scientific, we do not expect further royalty reductions in
2024 and beyond. We continually monitor the implications of patent expiry and
have not seen any generic isobaric tags enter the markets so far.
Management of Risk: The Group retains limited but experienced patent
capability in house, supplemented by external advice, which has established
controls to avoid the release of patentable material before it has filed
patent applications. Maintenance of the existing patent portfolio is subject
to biannual review ensuring that its ongoing cost is proportional to its
perceived value. We seek to prolong the value of our proprietary technologies
by patenting improved chemical tags and superior biomarker panels when we are
able to do so, and we monitor the impact of patent expiry by monitoring of
market share of licensed products such as TMT(®) and TMTpro™.
Section 172 statement
The Board recognises the importance of the Group's wider stakeholders when
performing their duties under Section 172(1) of the Companies Act and their
duties to act in the way they consider, in good faith, would be most likely to
promote the success of the company for the benefit of its members as a whole,
and in doing so have regard (amongst other matters) to:
(a) the likely consequences of any decision in the long term,
(b) the interests of the company's employees,
(c) the need to foster the company's business relationships with suppliers,
customers and others,
(d) the impact of the company's operations on the community and the
environment,
(e) the desirability of the company maintaining a reputation for high
standards of business conduct, and
(f) the need to act fairly as between members of the company.
The Board considers that all their decisions are taken with the long-term in
mind, understanding that these decisions need to regard the interests of the
company's employees, its relationships with suppliers, customers, the
communities and the environment in which it operates. It is the view of the
Board that these requirements are addressed in the Corporate Governance
Statement, which can also be found on the company's website www.proteomics.com
(http://www.proteomics.com) .
For the purpose of this statement detailed descriptions of the decisions taken
are limited to those of strategic importance. The Board believes that two
decisions taken during the year fall into this category and were made with
full consideration of both internal and external stakeholders as follows:
Annual General Meeting (AGM)
The Board encourages engagement with the Group's shareholders and took the
decision in 2023 to hold the AGM as both an in person and virtual meeting
therefore improving accessibility.
Investment in a US laboratory
The board considers the decision to open a US laboratory facility an important
investment in the future of the organisation. With a large percentage of
interest in the organisation's services originating from the US the new San
Diego laboratory will expand the reach of the organisation to provide services
to both existing and new customers in the US.
By Order of the Board
Coveham House
Downside Bridge Road
Cobham
Surrey KT11 3EP
Victoria Birse
Company Secretary
9 April 2024
Consolidated income statement
For the year ended 31 December 2023
Note Year ended Year ended
31 December 2023 31 December 2022
£'000 £'000
Revenue
Licences, sales and services 5,028 7,780
Revenue - total 5,028 7,780
Cost of sales (3,381) (3,013)
Gross profit 1,647 4,767
Administrative expenses (3,268) (3,039)
Operating (loss)/profit (1,621) 1,728
Finance costs (797) (473)
(Loss)/profit before taxation (2,418) 1,255
Tax (charge)/credit (25) 70
(Loss)/profit for the year (2,443) 1,325
(Loss)/profit per share
Basic 3 (0.83p) 0.45p
Diluted (0.83p) 0.43p
Consolidated statement of comprehensive income
For the year ended 31 December 2023
Year ended Year ended
31 December 2023 31 December 2022
£'000 £'000
(Loss)/profit for the year (2,443) 1,325
Other comprehensive income for the year
Items that will or may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (41) 158
Re-measurement of Defined Benefit Pension Scheme 43 145
(Loss)/profit and total comprehensive income for the year (2,441) 1,628
Attributable to owners of parent (2,441) 1,628
Consolidated balance sheet
As at 31 December 2023
2023 2022
£'000 £'000
Non-current assets
Goodwill 4,218 4,218
Property, plant and equipment 551 444
Right-of-use asset 2,525 873
7,294 5,535
Current assets
Inventories 837 901
Trade and other receivables 955 1,443
Contract assets 345 560
Cash and cash equivalents 2,027 3,994
4,164 6,898
Total assets 11,458 12,433
Current liabilities
Trade and other payables (629) (823)
Contract liabilities (1) (104)
Borrowings (11,235) (11,262)
Lease liabilities (609) (300)
(12,474) (12,489)
Net current liabilities (8,310) (5,591)
Non-current liabilities
Lease liabilities (1,631) (353)
Pension provisions (419) (434)
Total non-current liabilities (2,050) (787)
Total liabilities (14,524) (13,276)
Net liabilities (3,066) (843)
Equity
Share capital 2,952 2,952
Share premium 51,466 51,466
Share-based payment reserve 4,713 4,495
Merger reserve 10,755 10,755
Translation reserve and other reserve (10) 31
Retained loss (72,942) (70,542)
Total deficit (3,066) (843)
Consolidated statement of changes in equity
For the year ended 31 December 2023
Share Share Equity attributable to owners of the parent
Share premium based payment Total
capital account reserve Translation Merger Retained (deficit)
reserve reserve loss
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2022 2,952 51,466 4,193 (128) 10,755 (72,013) (2,775) (2,775)
- - - - - 1,325 1,325
Profit for the year 1,325
Exchange differences on translation of foreign operations - - - 158 - - 158
158
Re-measurement of Defined Benefit Pension Schemes - - - - - 145 145 145
Profit and total comprehensive expense for the year - - - 158 - 1,470
1,628 1,628
Credit to equity for share-based payment - - 303 - - - 303
303
At 31 December 2022 2,952 51,466 4,495 31 10,755 (70,542) (843)
(843)
Consolidated statement of changes in equity
For the year ended 31 December 2023
Share Share Equity attributable to owners of the parent
Share premium based payment Total
capital account reserve Translation Merger Retained (deficit)
reserve reserve loss
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
At 1 January 2023 2,952 51,466 4,495 31 10,755 (70,542) (843) (843)
Loss for the year - - - - - (2,443) (2,443)
(2,443)
Exchange differences on translation of foreign operations - - - (41) - - (41)
(41)
Re-measurement of Defined Benefit Pension Schemes - - - - - 43 43 43
Loss and total comprehensive income for the year - - - (41) - (2,400)
(2,441) (2,441)
Credit to equity for share-based payment - - 218 - - - 218
218
At 31 December 2023 2,952 51,466 4,713 (10) 10,755 (72,942) (3,066) (3,066)
Consolidated cash flow statement
For the year ended 31 December 2023
Group Group
Year ended Year ended
31 December 31 December
2023 2022
£'000 £'000
(Loss)/profit after tax (2,443) 1,325
Adjustments for:
Finance costs 797 437
Depreciation of property, plant and equipment 123 106
Lease depreciation 361 178
Tax (credit)/charge 25 (70)
Share-based payment expense 218 303
Operating cash flows before movements in Working capital
(919) 2,279
Decrease in inventories 63 187
Decrease/(increase) in receivables 704 (920)
(Decrease)/increase in payables (298) 293
(Decrease)/increase in provisions (15) 80
Foreign exchange 9 151
Cash (used in)/generated from operations (456) 2,070
Tax (paid)/received (25) 70
Net cash (outflow)/inflow from operating activities (481) 2,140
Cash flows from investing activities
Lease upfront payment (187) -
Purchases of property, plant and equipment (237) (319)
Loans advanced to subsidiary undertakings - -
Net cash (outflow)/inflow from investing activities (424) (319)
Financing activities
Lease payments (238) (209)
Debt repayments (824) -
Net cash outflow from financing activities (1,062) (209)
Net increase in cash and cash equivalents (1,967) 1,612
Cash and cash equivalents at beginning of year 3,994 2,387
Effect of foreign exchange rate changes - (5)
Cash and cash equivalents at end of year 2,027 3,994
Notes to the Financial Information
1. Basis of Preparation
The financial information set out in this document does not constitute the
Company's statutory accounts for the years ended 31 December 2023 or 2022
within the meaning of Section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2023, which were approved by the
directors on 9 April 2024, have been reported on by the Independent
Auditors. The Independent Auditor's reports on the Annual Report and
Financial Statements for years ended 31 December 2023 and 2022 were
unqualified and did not contain a statement under 498(2) or 498(3) of the
Companies Act 2006.
Statutory accounts for the year ended 31 December 2022 have been filed with
the Registrar of Companies. The statutory accounts for the year ended 31
December 2023 will be delivered to the Registrar of Companies in due
course and will be posted to shareholders shortly, and thereafter will be
available from the Company's registered office at Coveham House, Downside
Bridge Road, Cobham, Surrey KT11 3EP and from the Company's website
http://www.proteomics.com/investors (http://www.proteomics.com/investors) .
The financial information set out in these results has been prepared using the
recognition and measurement principles of UK adopted international accounting
standards in conformity with the requirements of the Companies Act 2006.
The accounting policies adopted in these results have been consistently
applied to all the years presented and are consistent with the policies used
in the preparation of the financial statements for the year ended 31 December
2022, except for those that relate to new standards and interpretations
effective for the first time for periods beginning on (or after) 1 January
2023. Other new standards, amendments and interpretations to existing
standards, which have been adopted by the Group have not been listed, since
they have no material impact on the financial statements.
2. Liquidity and Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out in the Chief
Executive Officer's Statement and Strategic Report. The financial position
of the Group, its cash flows, liquidity position and borrowing facilities are
described in the notes to the financial statements, in particular in the
consolidated cash flow statement.
Notwithstanding net liabilities of £3,066k these financial statements have
been prepared on the going concern basis which remains reliant on the Group
achieving an adequate level of sales in order to maintain sufficient working
capital to support its activities. The directors have reviewed the Company's
and the Group's going concern position, taking account of current business
activities, budgeted performance and the factors likely to affect its future
development, as set out in the Annual report, and including the Group's
objectives, policies and processes for managing its working capital, its
financial risk management objectives and its exposure to credit and liquidity
risks.
In particular, the directors have considered the challenges from the macro
environment on international business, and the general inflationary pressure
on costs. The Company did not see any impact on the supply chain of its raw
materials or its products but did observe reduced demand for TMT(®) and for
its services during the second half of 2023 but has seen first signs of a
potential recovery since the beginning of 2024. During 2023 the Company has
observed price increases from its suppliers and vendors and had increases in
its labour costs.
Due to the continued backdrop from the macro environment on international
business, and the general inflationary pressure on costs, Group revenues for
the year ended 31 December 2023 decreased by 35% to £5.03m (2022: £7.78m).
Proteomic (biomarker) services decreased 41% to £1.63m (2022: £2.75m). Sales
and royalties attributable to TMT(®) and TMTpro™ reagents were £3.40m
(2022: £4.16m). Total costs, excluding finance costs, rose to £6.65m
(2022: £6.05m) and this resulted in an operating loss of £1.62m (2022:
operating profit of £1.73m) and a net loss of £2.44m (2022: a profit of
£1.33m). Cash reserves at the year-end were at £2.03m (2022: £3.99m).
The Group is also dependent on the loan facility provided by the Chairman of
the Group, which under the terms of the facility, is repayable on demand. The
amount owed as of 31 December 2023, including interest, was £11,235k (2022:
£10,459k).
The directors have received a legally binding written confirmation from the
Chairman that he has no intention of seeking its repayment, with the facility
continuing to be made available to the Group, on the existing terms, for at
least 12 months from the date of approval of these financial statements or
until at least 30 April 2025.
On 29 March 2021, the loan facility with Vulpes Investment Management Private
Limited ("VIM") (the "Loan") was amended such that the Loan and all accrued
interest is now repayable on 1 May 2022 (previously 1 May 2021). On the 17
June 2021 the Loan Agreement was amended to allow for conversion into ordinary
shares such that until 30 April 2022, VIM may convert part (being not less
than £50,000 or a multiple thereof) or all of the Drawn Loan and accrued
interest to 31 December 2022 (being £51,538) into new ordinary shares of the
Company. The conversion price was 7.16p per share, which is the average of the
closing middle market price for the ordinary shares of the Company during the
five consecutive trading days immediately prior to entering into the Loan
Amendment. of On 30 March 2022, the Company signed the Third Amendment to the
VIM Loan Agreement which extended the term of the loan to 30 June 2023. At
31 May 2023 amounts drawn £700k interest £102k). The loan and accrued
interest totalling £824,424 was repaid to VIM on the 1 June 2023.
Following a detailed review of forecasts, budgets, sales order book and with
the knowledge of how the Group has traded in the second year post the global
pandemic, the directors have a reasonable expectation the Group as a whole,
has adequate financial and other resources to continue in operational
existence for the period of at least twelve months post approval of these
financial statements. For this reason, the Directors continue to adopt the
going concern basis in preparing the Financial Statements.
3. Profit per Share from Continuing Operations
The calculations of basic and diluted loss per ordinary share are based on the
following profits and numbers of shares.
2023 2022
£'000 £'000
(Loss)/profit for the financial year (2,443) 1,325
2023 2022
Number of Number of
shares
shares
Weighted average number of ordinary shares for the purposes of calculating
basic and diluted earnings per share:
Weighted average number of ordinary shares and outstanding options for the
purposes of calculating diluted earnings per share: 295,182,056 295,182,056
311,222,086 309,020,565
The weighted average number of ordinary shares outstanding was calculated
applying the treasury stock method to an amount of 23.6m share options which
were in the money at the 31 December 2023. An average share price for 2023 of
5.43p per share added by the outstanding service amounts for these options and
resulting in a number of shares of 16,040,030 added to the existing issued
share stock for the purpose to calculate the diluted EPS. A number of 0.5m
shares were not considered in the calculation of the weighted number of
outstanding shares used for the diluted EPS calculation as these options were
not dilutive at the 31 December 2023. Since the Group is recording a loss for
2023 no dilution has been recognised in calculation of the loss per share for
2023.
4. Cautionary Statement on Forward-looking Statements
Proteome Sciences has made forward-looking statements in this preliminary
announcement. The Group considers any statements that are not historical facts
as "forward-looking statements". They relate to events and trends that are
subject to risk and uncertainty that may cause actual results and the
financial performance of the Group to differ materially from those contained
in any forward-looking statement. These statements are made in good faith
based on information available to them and such statements should be treated
with caution due to the inherent uncertainties, including both economic and
business risk factors, underlying any such forward-looking information.
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